Hotline #35 - May 22, 1998

Today -- perhaps as this is being posted -- the House and Senate are voting on the final, post-conference version of ISTEA. Conferees ended negotiations last night as final agreements were reached in all areas.

The best news out of ISTEA is the improved tax treatment of employer-provided transit payments. Under the new plan, employers will be able to remove $65 a month from a worker's existing pretax salary and give it to them as transit passes that are not subject to federal, state, or local taxes, including payroll taxes the employer pays. The plan calls for increasing the benefit to $100 per month starting in 2002.

Unfortunately, however, two top issues important to intercity passenger rail were not addressed. State flexibility to spend some federal transportation funds on intercity passenger rail capital items was dropped last weekend at the insistence of House conferees. Discussions included giving this flexibility to a limited number of states. Some observers believe this got enough prominence to help future efforts by a smaller number of states eager to get flexibility.

The redefinition of appropriated Amtrak capital to include maintenance -- the definition that already applies to federally appropriated capital for transit -- was in play until yesterday and dropped because time ran out. This redefinition, first proposed by the Administration in their ISTEA bill last year, was strongly supported by James Oberstar (Minn.), ranking Democrat on the House Transportation and Infrastructure Committee, and was not opposed by Chairman Bud Shuster (R.-Pa.).

The push now is to get the right language on the appropriations bills, which indeed is where the redefinition for transit was placed last year. The next move will be in the Senate, where Transportation Appropriations Chairman Shelby (R.-Ala.) has a mark-up hearing scheduled for June 4. All Senators on his subcommittee need to hear that they must fully fund Amtrak and provide for the capital redefinition.

Transit did better in ISTEA than passenger rail. Preliminary calculations indicate that the new bill guarantees nearly 18% of the bill's total funding to transit. By comparison, actual obligations for transit under the 1991 ISTEA law were just below 17%. Both amounts exclude highway funds flexed to transit, which came to about $600 million under the 1991 law, and could exceed $1 billion a year under the new law. On the minus side, however, transit supporters will have to fight to avoid flexing Congestion Mitigation Air Quality funds to highway purposes, something the conferees allowed states to do.

Passenger trains may return next year to Oklahoma, which for nearly 20 years has been the most populous state with no Amtrak service. On May 18, there was an announcement from U.S. Sen. Don Nickles (R.), state DOT Secretary Neal McCaleb, and Amtrak Acting President George Warrington, who all met last week. They said they are working on a plan to start Amtrak service sometime in the spring of 1999. There is no preferred route yet. Oklahoma would pay for part of the service with money it got from the Taxpayer Relief Act as a state without Amtrak service.

President Clinton formally announced his choices for the Amtrak board yesterday. As we announced earlier this spring, they include DOT Secretary Rodney Slater, current board members Amy Rosen and Sylvia de Leon, former Massachusetts Gov. Michael Dukakis, former Virginia Gov. Linwood Holton, and Mayor John Robert Smith of Meridian, Miss. However, one earlier choice has been replaced by Wisconsin Gov. Tommy Thompson. The Senate must confirm all but Slater. It is disappointing the Administration took so long to produce these nominations, given the fact that the Amtrak reauthorization law is nullified if three of the nominees are not confirmed by June 30. However, because Amtrak reauthorization provides for expedited handling of these nominations, and because Clinton's slate includes three genuine and prominent Republicans, there is a real chance that confirmation will come in time.